In the Covid crisis, forecasts are useless

March 29, 2020 — we finally got it: the pandemic is here, we understand that the number of infected people will rise to a peak, followed by a sharp decrease in the number of victims. Or at least we think we got it.

Start-ups are being told that there will be no money from new rounds in the next 12 months and their VCs are asking them to break even and draw up business plans showing that there is enough cash in the bank through 2021 even if the worst-case scenario comes true.

That is what experienced venture capitalists did in 2008, that is what Sequoia says we should do. But is it so reasonable after all?

VCs ask for forecasts because it’s the only issue they dare to raise at the moment, and that’s what provides them with a framework for discussion with the founders. In these very uncertain times, there is no point in planning as we used to do it in venture capital. What is more, it can be toxic and give a false sense of control.

The only thing we know is that we don’t know what will come next. We did not foresee the lockdown a month ago, when it had already been implemented in Hubei and Italy. If we cannot integrate the information that is already on the table, how can we anticipate the great unknown events that will certainly occur in the days and weeks to come.

So let us be humble and focus on the short term. 3-month plan is good enough. It can highlight shrinking margins of manoeuvre and help founders preserve as much cash and sales potential as possible.

For a longer term perspective, forecasting do not help. Founders must assess the true value of their product, both in the lockdown (as we do not know for how long it will last) and post-Covid19 periods. They must work tirelessly to improve efficiency and rigour at the company level and to be more useful to their customers. VCs must engage in these discussions in a supportive way, open-minded and with no pre-determined answer. Speed and agility are everthing.

Be safe.

You can also follow us on Medium. Your feedback is priceless, feel free to ping us at